• "People do not want to buy a quarter-inch [drill] bit, they want a quarter-inch hole!

"
o Reminder to marketers that a deep understanding of consumers (their needs
and their resulting behaviors) is the central ingerdient in creating and
marketing successful products and services.
• It is a challenge for marketers (and, ultimately, for organizations) that consumers are
a varied lot (breytilegir) when it comes to deciding whether, when, how, and what to
buy.
• The manner in which consumers make their buying decisions can vary by product
category, by the buying context, and/or by consumers’ personal idiosyncrasies.
• Consumer buying behavior, despite its variety (breytileika) and complexity
(complicated), is not completely random, and organizations can use models to
predict patterns of buying behavior.
o These patterns are driven by—at a minimum—the product under
consideration, the context in which the buying takes place, and the people
involved in the buying process.
o When marketers understand these patterns, they can anticipate consumers’
behavior and tailor their selling efforts to better match consumers’ buying
processes.
o This understanding ultimately benefits both customers and organizations.

2.1 Frameworks for Understanding How Consumers Make Decisions

• Over the years, marketing practitioners and academics have developed numerous
frameworks to make sense of consumers’ decision-making processes.
o Each framework views the buying process through a different lens, offering
valuable perspectives on the many factors that influence consumer behavior.
• Here we look at four frameworks that have stood the test of time and have proven
useful for mapping out the process by which consumers make a purchase:
o Cognitive versus emotional decision making;
o High-involvement decision making versus low-involvement decision making;
o Optimizing versus “satisficing” decision making;
o Compensatory versus noncompensatory decision making.

2.1.1. Cognitive Versus Emotional Decision Making

• Perhaps the most basic dimension in which consumer decision making varies is in
whether a particular purchase hinges on cognition (vitund) or on emotion
(tilfinningum).
o Not surprisingly, many purchases are primarily cognitive in nature (fyrst og
fremst vitræn að eðlisfari), driven by the mind.
§ Such purchase decisions entail a deliberative, information-based
processing of relevant product characteristics.
§ For most people, buying insurance is a cognitive purchase.
§ People interested in purchasing an insurance policy tend to weigh
factors such as the amount of coverage, the size of any deductible,
and the cost of the policy in an attempt to arrive at an economically
optimal and rational choice.
• But other decisions are decidedly emotional in nature, driven by the heart and
entailing a subjective liking for one option over another.
 o When a person living in Hawaii falls in love with a wool-lined leather bomber
jacket—in spite of its impracticality in a warm climate—emotions are at play.
§ Rationally, purchasing the jacket makes little sense. Emotionally,
however, the jacket may allow the consumer to recapture a youthful,
carefree image of himself, and this feeling may drive the buying
process
o In such cases, rationality and reasoned consideration may take a back seat to
personal emotion.
• Many purchases, of course, have both a cognitive and emotional component.
• How do marketers determine whether a person‘s bying process is lagely cognitive,
emotional, or some combination of the two?
o They can start by considering factors such as
§ Product type
§ Context
§ Individual differences

• Product type:
o Certain products or product categories lend themselves to cognitive
processing, such as those that serve a utilitarian purpose (nytsamlegur
tilgangur).
o Lawnmowers, garbage disposals, income tax preparation software, house
paint, and countless other products all serve a strong utilitarian purpose.
§ For such products, buyers tend to objectively evaluate alternatives
within these product categories based on how well they satisfy that
purpose.
o In contrast, products that serve an ego-expressive or hedonic (pleasure-
seeking behavior) purpose often elicit more emotional processing.
§ Products purchased because the buyers think they say something
about who they are or who they aspire to be encourage more
emotional processing, as do those intended to make a statement to
peers and social groups.
§ Fashion goods such as clothing, shoes, jewelry, and accessories
generally entail emotional processing for most people, as do fine
wines, boutique coffees, and gourmet foods. And the purchase of
artwork and home decorations are typically driven more by the heart
than the mind.
o A similar but distinct dimension that influences whether decision making is
more likely to be cognitive or emotional is whether a product can be
considered more of a search versus experience good.
§ Search goods:
• Generally have a wealth of researchable information available,
so consumers can learn nearly everything they need to know
about the product before deciding whether to buy.
• For example a washing machine, you can find everything
about it.
 o Such search goods generally lend themselves to
cognitive processing.
§ Experience goods:
• In contrast, consumers can assess the characteristics of
experience goods only after purchasing and using them.
o Many services fall into this category.
• Theater, foods, beverages (drykkir), and summer vacations.
• Given these characteristics, experience goods tend to elicit
more emotional processing.

• Context:
o Consider, too, the context in which the product or service will be used.

• Individual differences:
o Finally, marketers must consider the natural tendencies of the individual
buyer.
o In popular jargon, the right brain/left brain dichotomy captures the sense
that some people are governed more by emotions and others more by facts
and figures.
§ This distinction implies that the very same product in the very same
context might elicit quite different decision processes based on an
individual’s natural tendencies.

• The cognition/emotion distinction is of concern for the marketer primarily because:

o Cognitive decision making often is slower, more systematic (kerfisbundnari),
and more exhaustive (tæmand) than emotional decision making (fx. I know it
when I see it approach).
• Depending on whether a particular customer’s buying process is primarily cognitive
or emotional, marketers must adapt their selling process accordingly.
o For instance, they should vary product placement (vera með mismunandi
vörur í verslunum) in stores as a function of the cognitive/emotional
distinction.
§ Cognitive: placement in stores or on the website may not be critical.
§ Emotional: seller may choose to place a product where it is most likely
to be seen and therefore encourage impulse bying.
• Marketers can also tailor promotional efforts to cognitive or emotional purchase
decisions.
o Advertising that describes the features of an offering, emphasizes a favorable
price, documents the product’s superiority to competing offerings, or
provides instructions for learning more about the offering may constitute a
cognitive appeal.
o Advertising that uses evocative imagery, symbols, and situations that tap into
feelings such as happiness, fear, patriotism, or sexual desire may be more
effective when decision making is driven by emotions.
• Finally, a company should consider the form of the decision making likely to be used
by its target market.
 o For example, teens often employ more emotional decision making than
adults.

2.1.2 High-Involvement Versus Low-Involvement Decision Making

• Consumer buying decisions also vary in the level of involvement they engender.
• Certain purchases are characterized by highly involved and elaborate processing,
while others are characterized by minimally involved or almost mindless processing.
o Complicating matters, both cognitive and emotional purchases can be either
high- or low-involvement.
• High-involvement:
o Anything from a wedding gown or a dishwasher to a car or a house.
o The buyer is fully engaged, the decision making tends to be effortful, the time
frame tends to be relatively long, and the consequences of making a good
versus a bad choice tend to be significant and visible.
§ For a purchase that is largely cognitive, such as buying a widescreen
television, a consumer may research the various makes and models
on the market, visit several retailers to see which has the best prices,
talk to friends to get their recommendations, and scan the newspaper
for temporary price promotions.
§ Similarly, for a purchase that is largely emotional, such as buying a
dress for a high school prom, a consumer also may visit many stores,
get feedback from friends and relatives, and make sure that the dress
chosen is distinctive enough that it does not match another prom-
goer’s dress.
• Low-involvement:
o Tend to require far less effort; they often happen quickly, and they are
perceived as having far lower risk.
o For most people, purchasing gum in a convenience store, buying a soda with
lunch, or extending a monthly fitness club membership would entail low
involvement.
§ Could be due to cost, or routine, or the available alternatives are
largely similar.
o Interestingly, whether a purchase fosters high or low involvement can change
over time.
o The level of involvement can vary by consumer, even when the product type
is held constant.
o As with cognitive versus emotional purchases, savvy marketers adapt their
selling strategies to consumers’ involvement levels.
§ High-involvement:
• Some companies tout their easy-return policies or offer
guarantees to reduce the consumer’s perceived risk of
purchase.
• „Shop around“.
• Some companies might even encourage consumers to make
price comparisons.
§ Low-involvement:
 • May include making the offering readily available, as when
stores place gum, candy, and magazines in checkout aisles or
online retailers suggest “products you may also like” while a
repeat consumer is logged in.

2.1.3 Optimizing Versus “Satisficing” Decision Making

• A concept related to involvement, but also distinct from it, is whether the goal of the
purchase is to optimize on choice or simply to “satisfice.”
• While it is tempting to assume that consumers are always motivated to purchase the
best alternative they can—that is, optimizing decision making—the reality is that
consumers sometimes choose to satisfice instead.
• Satisficing decision making:
o Satisficing decision making is the process whereby consumers settle for an
alternative that is “good enough” or that passes some acceptable threshold.
o Consider the difference between buying and renting a vacation home.
o “Rent before you buy”.
o In the end, satisficers are willing to expend the time and energy needed to
make a good choice as opposed to the far greater time and energy needed to
make the best choice.
• Factors that influence whether a consumer uses an optimizing versus satisficing
decision-making process are some of the same ones that drive whether a process
entails high or low involvement.
o As a general rule, the greater the expense (a car, a house, an insurance plan),
the more likely consumers will try to optimize.
o Similarly, the greater the variance in quality and price, the more likely they
will seek to optimize, whereas when all alternatives are pretty much the
same, the benefit of additional search efforts may be negligible (hverfandi).
• Finally, the length of product or service usage may be a factor.
o For instance, it’s far more important to get one’s choice of university exactly
right than to choose the perfect week-long adult education class.
• The optimizing versus satisficing distinction often varies from person to person.
o Independent (óháð) of the product category or type of decision, some
consumers are more likely to optimize and some more likely to satisfice, and
they may do so across the bulk of their purchase decisions.
• The optimizer/satisficer distinction should affect a company’s go-to-market
strategies.

2.1.4 Compensatory Versus Noncompensatory Decision Making

• Consumer decision making also can be categorized by the amount of relevant
information used and the trade-offs made to arrive at consumers’ choices.
• Compensatory decision making :
o In some cases, consumers consider (or attempt to consider) all of the
attributes that are relevant, making trade-offs between those attributes.
o This process is called compensatory decision making because a product’s
shortcomings on a particular attribute, such as a price that is high, can be
compensated for by its strengths on another attribute, such as exceptional
styling, which results in a product that consumers still find desirable.
 • Noncompensatory decision making:
o Consumers may consider some, but not all, of a product’s attributes, ignoring
potential tradeoffs between those attributes.
o This process is termed noncompensatory decision making because a
product’s failure to reach an acceptable threshold on one attribute cannot be
compensated for by high performance on another attribute.
• Factors that drive compensatory versus noncompensatory decision making:
o One factor that drives compensatory versus noncompensatory decision
making is the size of the choice set.
§ If there are a limited number of choices— such as three restaurants in
a small town—it is not too difficult to consider all the alternatives on
all the relevant attributes. However, if there are many choices —such
as where to go on one’s honeymoon—it becomes difficult and time-
consuming to be exhaustive in one’s decision making.
• As a result, the happy couple may reduce the number of
alternatives under consideration by establishing some
noncompensatory thresholds: The destination must be in a
warm climate, on the water, and within a five-hour plane ride.
o Second factor that drives the use of compensatory..... is the importance of
the various attributes to the consumer.
§ if one attribute dominates all others, no form of compensatory
decision making may produce a result that is superior to a
noncompensatory process.
• Finally, resource availability may play a role.
o If consumers have the time, patience, and access to product information,
they may employ compensatory decision making.
• As with the other decision making frameworks identified, the dominant process that
consumers employ—compensatory versus noncompensatory— should drive a firm’s
marketing efforts.
• If consumers are engaged in compensatory decision making, while it is not necessary
that a product score highly on every attribute, it must score well in the aggregate,
when all attributes are factored in.
o Efforts to promote the “total package” may be most important and the
company should strive to make all relevant information readily available.
• If the decision making is noncompensatory, however, a firm needs to do especially
well only on the one or two criteria that dominate the consumers’ decision making.

2.2 The Consumer Decision-Making

• Let’s now turn to understanding the complete consumer decision- making process.
• When we consider the steps required for individuals to make a purchase decision,
we often focus most of our attention on the actual moment of the transaction:
o Such as the in-store experience
o The encounter with the salesperson
o Clicking on the “Purchase” button on a merchant’s website
• Regardless of the type of transaction, however, the decision-making process (DMP)
entails three distinct phases:
 o Pre-purchase, purchase, and post- purchase—through which consumers
typically progress as they make buying decisions.

2.2.1 Phase 1: Pre-Purchase

• Before purchasing a product or service, consumers engage in a series of pre-
purchase activities, including the recognition of a need, a search for viable
alternatives to satisfy that need, and the collection of information about those
alternatives.
• Depending on the nature of the purchase, these pre-purchases can take a short or a
long time.
• There needs to be a trigger, to move „Anna“ from a cold state („my current car is
fine“) to a warm or hot state („I need a new car“).
• DÆMI:
o Consider a consumer we’ll call Anna, who decides to purchase a car. First,
there needs to be a trigger—something that plants the thought in Anna’s
mind that she needs to buy a new car. Perhaps she learned that the latest
repair on her current car would cost $4,000, more than the resale value of
the car. Maybe she had trouble starting her car earlier that day. Perhaps one
of Anna’s friends recently purchased a new car and had offered her a ride,
making Anna feel a bit envious. Or maybe she is turning 30 and wants to
mark that milestone birthday by buying a new car. In short, something needs
to trigger Anna’s interest and move her from what marketers call a “cold”
state (“My current car is fine”) to a “warm” or “hot” state (“I really need a
new car”). RESTIN AF DÆMINU Á BLS 15.
• THE PROCESS:
Trigger – search and
consideration process –
enters the evalutation of
alternatives – total set to
awarness set which leads to a
consideration set – which
leads to a choice set and
ultimately to the decision to
buy a specific car.
o Note that as consumers proceed through these steps, any of the decision
frameworks we have identified may come into play.
• Marketers must understand that there is a pre-purchase phase to almost all
purchases and that they, as marketers, can play a role in the shape and length of this
phase.
• Aside from providing triggers, companies must ensure that their products or services
make it into buyers’ awareness sets and then into their consideration and choice
sets.
• Finally, companies can try to influence how consumers narrow down their set of
options by:
o Explaining or magnifying the importance of attributes on which a product
does well.
o Or minimizing the importance of attributes on which it does poorly.
2.2.2 Phase 2: Purchase
• Once a consumer makes the decision to buy any product or service, the purchase
phase begins.
• This phase may entail making choices about:
o Which brand to buy
o From whom to buy it (from a brick-and-mortar retailer or an online retailer)
o How many items of the offering to buy (one, or several if a volume discount is
offered)
o When to buy (during a holiday sale or on a weekday when stores won’t be
crowded)
o And how to pay (by cash, check, credit, or financing)
• Companies need to anticipate barriers to purchase and attempt to minimize them.
• Note that, in many cases, a consumer may have decided to buy a product— say, a
bottle of white wine—but has not yet decided which brand to buy. In such a case,
the buyer is open to a host of cues that companies can influence—such as whether
the product is displayed, how recognizable the brand name is, how attractive the
label is, and how acceptable the price point is.

2.2.3 Phase 3: Post-Purchase

• If a company has managed the pre-purchase and purchase phases well (and has a
little luck), the consumer buys the product or service.
o But, quite often, the company’s work is not done.
• In the post-purchase phase, a consumer’s liking for the purchased product and
loyalty to the company that sold it are by no means guaranteed.
o Buyers might be disappointed if the offering doesn’t fulfill their expectations,
or they might think they made a mistake if they hear other consumers rave
about an alternative product.
o This dreaded condition, known as buyer’s remorse, can arise particularly
when people have spent a great deal of money for a product.
• Finally, companies must consider how consumers will eventually dispose of products
in the post-purchase phase.
o This is especially important for products that can be difficult to dispose of,
perhaps because they are big and bulky or because they can damage the
environment.
• A failure at any phase in the process—whether at pre-purchase, purchase, or post-
purchase—can result in the loss of sales and future sales.

Dynamics by Buyer Type Across Phases in the Purchase Process

2.3 The Consumer Decision-Making Unit
• Paralleling (samhliða) the decision-making process (DMP) is the concept of the
decision-making unit (DMU):
o The set of individuals who affect, influence, and/or take part in a decision to
buy.
o Always consist of at least one person – the buyer – but often include many
additional individuals, each whom can push the buyer toward (or away from)
the actual purchase decision.

2.3.1 Roles Within Decision-Making Units

• Crucially for marketers, different members within a given DMU often play different
roles.
• To sell a product or service, marketers must understand the unique role played by
each member in the DMU.
o They must then tailor the marketing effort not only toward the eventual
buyer but also toward each individual who influences the decision.
• Roles in DMU:
o Buyer, influencer, gatekeeper and approver.

2.4.1 Analyzing the Decision-Making Process and Decision-Making Unit

• LESA DÆMI Í TEXTA 2.4.
• To begin grappling with these challenges, Merck analyzed the decision-making
processes of two key decision makers involved in the purchase and use of Propecia—
physicians and consumers.
The Decision-Making Process: Proactive Patients and Reactive Physicians

3.1 Forces Changing Consumer Behavior and the Buying Process

• Three developments in the marketing landscape—social media, co-creation and
consumer involvement, and “conscience” marketing—are affecting consumer
behavior and the buying process in the twenty-first century.
• While savvy marketers will still need to consider the basics as outlined in the
Essential Reading, these more recent developments mean that marketers must
engage with their customers in new and continually changing ways.

3.1.1 Social Media

• Consumers’ use of social media is exerting an enormous impact on the decision-
making process of consumers and the decision-making unit.
o Whereas a buyer might consult a few friends or colleagues offline in the pre-
purchase phase, websites such as Facebook make it easy for consumers to
consult their entire network of friends and acquaintances before making
even the most trivial purchase
§ (“Which iPhone case do all of you like better?”).
o Not surprisingly, firms have responded by upping their social media presence,
including inducing consumers to “like” their brands on Facebook as a means
of advertising the popularity of their offerings to other members of their
consumers’ networks.
• But perhaps nowhere is the effect of social media more apparent than in the post-
purchase phase of the buying process.
o Before the Internet, consumers who were disappointed or dissatisfied with
their purchases had limited and often ineffective recourse.
o They could complain to their friends, wait an interminable time “on hold” to
speak to a customer service representative, or report their concerns to
organizations whose mission it is to protect consumers’ interests.
o In contrast, social media enables consumers to broadcast their dissatisfaction
far and wide.
 • Experiences, like the guitar experience, have taught many organizations to devote
increasing customer service staff to monitor Twitter feeds for signs of customer
discontent —and then to contact dissatisfied customers quickly to minimize damage

3.1.2 Co-Creation and Consumer Involvement

• An increasing number of companies are involving customers in the co-creation of
products, services, and even marketing materials.
o For instance, for several years, Doritos has been crowdsourcing its Super
Bowl advertising, encouraging consumers to create advertisements that
compete for up to $1 million in prize money.
o One of the better known finalists in 2013, “Goat for Sale,” featured a man’s
tempestuous relationship with his recently purchased goat.
• Co-creation comes with a host of challenges: Companies that crowdsource their
marketing messages and products run the risk of diluting the cohesion of their brand
message and/or the coherence of their product lines.
o As a result, smart organizations use co-creation strategically while at the
same time maintaining sufficient control.

3.1.3 “Conscience” Marketing

• Increasingly, consumers are concerned about buying socially and environmentally
responsible products and services.
• In seeking to “buy green” or buy from companies that “do well by doing good,”
consumers may conduct more research on products and companies than they did in
the past, and they may work harder to ensure that their purchases match their
values.
o To appeal to them and other consumers who have the same values,
companies must not only claim that they are socially and environmentally
responsible in their business practices, they must prove it to consumers.

4. KEY TERMS
Cognitive decision making: Purchase decisions that entail a deliberative, information-based
processing of relevant product characteristics.

Compensatory decision making: Purchase decisions in which consumers consider (or

attempt to consider) all of the attributes that are relevant, making trade-offs between and
among those attributes.

Decision-making unit (DMU): The set of individuals who affect, influence, and take part in a
decision to buy.

Emotional decision making: Purchase decisions that entail a subjective liking for one option
over another.

High-involvement decision making: Purchase decisions in which the buyer is fully engaged,
the decision making tends to be effortful, the time frame tends to be relatively long, and the
consequences of making a good versus a bad choice tend to be great and visible.
Low-involvement decision making: Purchase decisions that require little effort, happen
quickly, and are perceived by consumers as having low risk.

Noncompensatory decision making: Purchase decisions in which consumers consider some,

but not all, of a product’s attributes, and ignore potential trade-offs between those
attributes; a product’s failure to reach an acceptable threshold on one attribute cannot be
compensated for by high performance on other attributes.

Optimizing decision making: Purchase decisions in which consumers are motivated to

purchase the best alternative they can.

“Satisficing” decision making: Purchase decisions in which consumers settle for an

alternative that is “good enough” or that passes some acceptable threshold.